Dow Jones takeover bid elicits mixed reviews

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Media buyers had both positive and negative reactions last week to the prospect of News Corp. acquiring Dow Jones & Co., publisher of The Wall Street Journal.

On May 1, News Corp. Chairman-CEO Rupert Murdoch made a $60 a share, or about $5 billion, bid for 125-year-old Dow Jones.

"Any effort to pitch us on synergies would be dead on arrival," said Gary Slack, chairman-chief experience officer of b-to-b ad agency Slack Barshinger, whose clients include CareerBuilder.com, Dow Epoxy and Tellabs Inc. "There are no synergies for media buyers." Noting the Journal's decades-long reputation for editorial excellence, he added, "as an evaluator and buyer of advertising, [to me, a takeover] would be a sad day."

But there were more upbeat reactions, too.

"Some companies could see this as a positive [that] could lead to more integrated opportunities," said Gene Hallacy, media director at ad agency Eric Mower & Associates, whose clients include FedEx Corp. and Nucor Corp., both of which are major advertisers in the Journal. Nevertheless, Hallacy said his immediate reaction was "these are two different organizations, and I would prefer to deal with each company individually in regard to their specific media assets."

Hallacy also voiced concern about News Corp.'s reputation for racy content. "I would be very cautious about the `Foxification' of the Dow Jones brand," he said.

This fall, Murdoch plans to launch a business channel to compete head-on with CNBC, and Dow Jones' authoritative financial content could ostensibly fuel the channel. (Dow Jones has an editorial contract with CNBC through 2012.)

One marketer who saw positive potential in the proposed acquisition was Mike Paradiso, VP-global media director at IT management software provider CA.

Dow Jones' content could bring "credibility to the channel right off the bat and make for a formidable competitor to CNBC," Paradiso said. "In an age of integration, getting your brand message through multiple channels could be beneficial to many advertisers."

Ken Doctor, a media analyst at research firm Outsell Inc., said that some of the moves Dow Jones has made in the last 18 months may have been executed to set the company up for a sale.

"[Dow Jones CEO Richard] Zannino could have bought the rest of Factiva to show Murdoch or anyone else the value of b-to-b," Doctor said. Late last year, Dow Jones purchased the remaining portion of Factiva, a business and research information service, from partner Reuters.

Regarding the thorny question of synergy between News Corp. and Dow Jones products, Doctor said, "Even though News Corp. is b-to-c, Murdoch can leverage [Dow Jones'] journalism and advertisers in all kinds of b-to-b settings."

"This is as much a distribution deal as a content deal," Doctor said. "Rupert knows Dow Jones has the best financial content, and he understands pipes and distribution better than anyone."

And the Journal's online component could prove a model for distributing any such content.

In an interview on Fox News Channel the day the bid was announced, Murdoch said that "young people are reading newspapers less or reading [them] on the Web. We have to adapt ourselves to that, not only to attract readers to the hard copy but, more and more, readers to the online [component] and to commercialize that. And the great thing—and the value of financial journalism and high-quality journalism—is that you can charge for it. The Wall Street Journal and the Financial Times, I think, are the only two newspapers in the whole world that charge for their online editions."

Murdoch also said that "with more resources" News Corp. could boost the Journal's circulation, which is 1.7 million in print and 931,000 online.

Murdoch's bid comes amid an era of dramatic change at Dow Jones. The company continues to take pains to reduce its print revenue from the current 60% of overall revenues to 50% by 2010.

Earlier this year, the Journal unveiled a comprehensive redesign of its print product featuring more news analysis and enhanced coverage of vertical markets. In early 2006, Dow Jones established a new organizational structure around three markets: consumer media, enterprise media and community media.

News Corp.'s bid met with resistance from members of the Bancroft family, which controls more than half of the company's voting stock. Several hours after the unsolicited bid was made public, Dow Jones said Michael B. Elefante, a director who is a representative of the Bancroft family, had informed the company's board of directors that members of the family constituting slightly more than 52% of the outstanding voting power of Dow Jones would vote against Murdoch's proposal. The Bancroft family owns 24.7% of Dow Jones' outstanding shares but has 64% of the voting power because of a dual-share class structure.